US Stocks Remain Lower In Down Week; DJIA Off 55

PeterA. McKay

A week of struggles for the U.S. stock market continued Friday as a new round of tepid economic data fueled increased concern that a six-month surge in stocks may have overextended the economic environment.

The Dow Jones Industrial Average was recently off 55 points, or 0.6%, at 9653, on track for a third straight daily loss. The S&P 500 was off 0.8%, led by a 1.5% slide in its industrial sector, which is especially sensitive to the prospects for a global economic recovery.

Weighing on stocks were a series of economic reports that further spooked investors who also shied from stocks on Thursday due to a weak report on sales of existing homes. Among the reports was a disappointing reading of durable-goods orders and later a report showing a slip in new home sales. Consumer sentiment was better than expected, but that report wasn't enough to revive the market from its recent slump.

Stocks began slightly lower but pushed strongly to the downside in the early afternoon. Given both the Dow and S&P 500 are down three of the last four sessions on the heels of a near six-month rally in stocks, there is a dearth of buyers to close out this week.

"We were due for a short-term pullback this week and it's clearly going on right now," said Randy Bateman, chief investment officer for Huntington Funds. "At this point late on a Friday, we are looking at some real support to bounce off of before going in."

Volume was particularly light on the session with NYSE Composite volume totaling 2.6 billion shares, compared with a 2009 average of just below 6 billion. Decliners outnumbered advancers by three to one.

Further weighing on stocks, some investors are reexamining what the U.S. economy's remaining weak spots are and how the economy might fare in the months ahead as officials in Washington scale back stopgap measures enacted during the financial crisis.

Chuck Akre, chief executive of Akre Capital Management in Middleburg, Va., said he's going to continue to keep his firm's cash reserve higher than normal for now rather than plowing it into stocks.

"I really believe we're going to have some opportunity to put that money to work at more favorable prices later," Akre said. "The economy is just facing enormous headwinds right now."

The technology sector was hurt by a 16% slide in Research In Motion after the BlackBerry maker issued a disappointing earnings forecast. Analysts said that the strong run-up in the stock price over the past few months made the company vulnerable to high expectations. The stock has nearly doubled this year.

The tech-focused Nasdaq Composite Index was recently off 1%, while the large-cap Nasdaq 100 was also down 1%.

On a more promising note, investor appetite for IPOs, which all but dried up in the wake of the financial crisis, is enjoying a comeback. Five companies went public Thursday, marking the biggest week for IPOs in more than 18 months.

Friday, Chinese computer-game company Shanda Games priced its IPO at the high end of expectations. The shares were down 5% in recent trading. Hospital operator Select Medical Holdings will also debut.

Still, Francis Gaskins, president of the research firm Gaskins Co., which tracks data regarding initial public offerings, cautioned that the recent flurry of new listings should be taken with a grain of salt.

"You're seeing bigger companies that have either been in existence for a long time or that already have funding" via the credit markets using stock offerings to boost their balance sheets further, said Gaskins, citing as examples Hyatt Hotels and Dole Food.

"The point of the IPO market is to help emerging companies emerge," he said. "That's not really what's happening here."

The dollar was weaker against major rivals. One euro cost $1.4667, up from $1.4656 late Thursday. One dollar fetched Y89.79 Japanese, down from Y81.22.

Treasury prices were mixed. The two-year note slipped 3/32 to yield 0.988%. The 10-year note was up 3/8 to yield 3.337%.

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